Reserve Primary Fund, the firm that basically invented the idea of a money market fund back in 1970 just saw its shares fall below $1 a share, which is about as close as money market funds get to going bust. This is the first time this has happened to a money market fund in fifteen years. The firm had almost $800 million in Lehman notes and commercial paper, now valued at $0. Money market funds borrow short and lend long (relatively speaking); once investors noticed all that toxic paper, things went south rapidly. This is only the second money market fund in US history to break the buck, which tells you just how worried you should be about the contagion of this mess.
A filmmaker animated hundreds of still photographs to create this Big Apple flip book